The impact of CO2 taxation on the configuration of new refineries: An application to Brazil

This article evaluates the impact of pricing CO2 emissions over the configuration of new refinery complexes in their conceptual phase. Two refineries’ schemes were simulated through a linear programming optimization model in order to compare the optimum configuration obtained before and after the input of different CO2 prices. The cases analyzed represent refining projects to be located in Brazil, a growing market for fuels and petrochemical feedstocks, as well as an oil producing country with rising crude exports. After 2012, emerging countries, such as Brazil, may adopt carbon emission reduction targets. Therefore, it is worth analyzing the impact of pricing CO2 emissions in these countries, where the majority of new refining projects will be located. Our findings indicate that the initial refinery configurations proposed are quite rigid technologically for CO2 prices up to US$ 100/t CO2. For CO2 prices higher than US$ 100/t CO2, refineries reduced their emissions by increasing the consumption of natural gas used to produce hydrogen, and through changes in the original configurations towards less-energy consuming process units. Promising technological advances, such as carbon capture and storage (CCS), can also diminish the rigidity of the model and facilitate actions to curb carbon emissions.